Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold."Niska Gas Storage Partners (NYSE: NKA) shares currently have a dividend yield of 9.90%. Niska Gas Storage Partners LLC owns and operates natural gas storage assets in North America. The average volume for Niska Gas Storage Partners has been 144,100 shares per day over the past 30 days. Niska Gas Storage Partners has a market cap of $499.5 million and is part of the utilities industry. Shares are down 3.4% year-to-date as of the close of trading on Friday. TheStreet Ratings rates Niska Gas Storage Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- NKA's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 104.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NISKA GAS STORAGE PARTNERS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NISKA GAS STORAGE PARTNERS continued to lose money by earning -$0.24 versus -$0.63 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus -$0.24).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 438.7% when compared to the same quarter one year prior, rising from -$1.28 million to $4.33 million.
- The gross profit margin for NISKA GAS STORAGE PARTNERS is currently very high, coming in at 75.18%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.70% trails the industry average.
- NKA has underperformed the S&P 500 Index, declining 5.67% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full Niska Gas Storage Partners Ratings Report.
- CCG, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.49%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 400.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for CAMPUS CREST COMMUNITIES INC is currently extremely low, coming in at 12.88%. Regardless of CCG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CCG's net profit margin of 3.28% is significantly lower than the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 50.7% when compared to the same quarter one year ago, falling from $2.16 million to $1.06 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAMPUS CREST COMMUNITIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Campus Crest Communities Ratings Report.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 36.4% when compared to the same quarter one year prior, rising from $12.84 million to $17.52 million.
- RESOURCE CAPITAL CORP has improved earnings per share by 9.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RESOURCE CAPITAL CORP reported lower earnings of $0.33 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.52 versus $0.33).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, RESOURCE CAPITAL CORP's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $19.17 million or 17.72% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full Resource Capital Ratings Report.
- Our dividend calendar.